The textile industry of India has been facing a major blow, one of the worst in its history, pertaining to the slowdown that hit the global textile and clothing markets in April 2014. Due the termination of region FTA by other competing nations, exports from India have encountered an all-time low owing to its tariff barriers, expensive cotton, high fibre price and the unprecedented delay in the pay-out of the TUF subsidies. Given the scenario, the industry had long been demanding the extension of additional incentives through the Merchandise Export from India Scheme (MEIS). The demand also pressed for a grant of 3% interest with respect to the export of all textile merchandise, at least till the time that the exports reach their projected potential growth.
Hence, when the extension was finally granted, the entire textile industry whole-heartedly welcomed the same. In fact, the Southern India Mills’ Association (SIMA) expressed the grant as a great relief to the industry, and especially the spinning sector, since it has a surplus production capacity pertaining to the fact that the advantage offered to the man-made spun yarn might eventually lead to growth in exports.
Even the Cotton Textiles Export Promotion Council praised the step stating that the inclusion of knitted and woven cotton fabric will greatly help the exporters in terms of overcoming the challenges that are currently being faced by the industry. Following the suit, the Indian Texpreneurs Forum accepted that the exports within the industry have been under tremendous pressure since the last semester and that the announcement will surely help in boosting the exports in the potential markets. It also suggested the need for the spinning industry to progress in terms of increase in production of both fabrics as well as garments.
Mr. A. Sakthivel, President, Tirupur Exporters Association exclaimed the new notification as a great boon to the industrialists who are on the look out to explore new markets which exhibit great potential. Countries such as Brazil, Russia and Mexico have immense potential, and will surely offer sustainable business environments in the foreseeable future.
The duty credit scrip, that comes as a part of the new notification, now encompasses 139 countries, compared to the earlier rendition, wherein it was available to a mere 28 countries of European Union along with USA, Canada and Japan. The duty credit scrip is stipulated at 2% of Free On Board realised value, and can conveniently be used to pay custom duties.
All in all, this amendment comes as a great respite to the struggling textile industry which has been greatly burdened by it humongous surplus production capacity, and more so in the spinning sector. There now seems a slight possibility of the improvement in the domestic demand of yarn, only if the benefits if the new notification are reaped in the best possible way.